With Father’s Day upon us, we thought we would take time to offer a little advice for the fathers and soon-to-be fathers out there. Preparing for your family’s financial future can be an intimidating concept, but by breaking down the planning into manageable steps, we hope to help you manage debt and to meet your financial goals.
Involve Your Kids in Your Household Budget
Budgeting is a powerful tool for every father. Outlining your income and expenses in a strong household budget is necessary to help you live within your means and build a robust savings account. But it’s also important to involve your kids in your household budget. By providing your kids with a solid understanding of budgeting early on, you set them up for success in the future.
Talk to them about wants vs. needs, detailing the budget process in an easy-to-understand way. If they’re old enough to earn an allowance, have them set savings goals for themselves that they can track and achieve. By creating a household budget for yourself and your kids, you’re modeling healthy financial habits and preparing your family for the future.
Start Building Your Retirement Savings Early
When it comes to saving for retirement, compound interest is your friend. Putting $75 a month in your retirement fund beginning at age 25 will generate much more by age 65 than putting $100 a month beginning at age 35, even though the amount you contribute is less. The earlier you put money into a retirement account, the longer that money has to generate earnings.
If your employer offers a traditional 401(k) plan, take advantage of it. Your employer may match your contributions up to a specific limit. If you’re not eligible for a 401(k), open an individual retirement account to begin saving for your nest egg.
Save For What’s Important
To help achieve financial stability and better afford the things you need for your family, it’s important to build up a savings account to help you meet your financial goals. All of the big things in life require you to save money: the down payment on a house, an auto loan to buy a car, and even a summer vacation for the family. If you set savings goals for yourself motivated by these goals, it’ll be easier to stick to your budget. Additionally, the more money you save, the less you may end up spending in the long run on interest or fees that can come with using credit.
Build An Emergency Fund
Just as you can’t predict the twists and turns that come with fatherhood, you can’t predict what emergencies will require an immediate expenditure of cash. It’s critical to have an emergency fund set aside to help pay for financial emergencies or unforeseen expenses. The car might break down, you might wind up with a costly hospital bill out of nowhere, or you may even be unexpectedly laid off from your job. Setting aside money in an emergency fund offers you peace of mind you need to walk through life without worrying about the danger around every corner. With a robust emergency fund, you can better meet your financial goals and help mitigate building debt.
Make Credit Work For You
Credit is an excellent tool for meeting your financial goals: the better your credit, the better interest rates you may receive on items such as a mortgage or an auto loan. But to build credit, you have to use it. If you have no credit or mediocre credit, find a credit card with no annual payment that you can use to start building credit for the future. Pay it off in full and on time every month and try to always keep your balance under 30% of your available credit.
Once you’ve established a higher credit score, you’ll likely be eligible for cards with more attractive promotions and rates that can earn you certain bonuses. Some credit cards offer high levels of cash back for purchases at grocery stores or gas stations, while others offer promotional bonuses of upwards of $200. If you’re smart with your credit and always pay your bill on time, you can take advantage of these bonuses to help give you a boost towards meeting your financial goals.
Whether you’re saving for retirement or building an emergency fund, it’s never too early to get started. Celebrate this Father’s Day by following these tips and providing for the ones you hold most dear.